Small St. Louis businesses fetch a median of $150,000 in 2010
St. Louis Business Journal
January 21, 2011
By Greg Edwards
The asking price for businesses for sale in the St. Louis metropolitan area remained flat year over year, but the businesses themselves appear to be performing a bit better, according to a survey of market conditions by BizBuySell.com.
The median asking price of businesses for sale in St. Louis was exactly $250,000 as of Dec. 31, $1,000 more than it was a year ago. That is based on 241 businesses listed with BizBuySell in the fourth quarter of 2010.
The businesses had median revenue of $381,262 as of Dec. 31, up from $343,963 a year earlier. The median cash flow, meaning the money that comes out of the business over the course of a year, was $84,158, compared with $71,666 last year.
"People are selling from a position of strength rather than weakness," said Mike Handelsman, general manager of BizBuySell, based in San Francisco.
Fifteen St. Louis-area businesses listed with BizBuySell sold during the year. The median sale price was $150,000. The businesses sold had a median revenue of $200,566 and a median cash flow of $45,000. The sales of smaller businesses are closing more easily because financing is harder to get for big businesses, Handelsman said. The businesses sold, though not identified by name, included a bakery and cafe, a hardware store, a plumbing company, a liquor and convenience store, and a dog grooming service.
Smaller deals are more often financed with help from the sellers because many banks have increased minimum loan amounts to $500,000, said Scott Osborne, owner of Osborne HomeCare Group in Chesterfield, which advises in the sale of home-health deals nationally. He said his sweet spot, businesses with valuations of $2 million to $20 million, will benefit from the Small Business Administration's decision to raise its loan limit to $5 million from $2 million.
The BizBuySell listings are from local business brokers and included 15 counties in the greater metropolitan area as well as the city of St. Louis. Handelsman said the businesses listed represent a fairly small percentage of the total market -- many businesses are sold to friends, family and employees -- but he believes they represent a majority of businesses listed with brokers.
